Most of us have heard about the sordid ACA agents involved with cases where misinformation was given, illegal consultation, and a host of other questionable actions. Another debacle has emerged where offices are failing to conclude whether or not a patient is actually qualified for a plan based on their medical history. Administrative confusion and lack of operational tact has lead many applications to fall into question.

1. HOLES IN ACA VERIFICATION MBAA © 2014
Page 1
Gaping Holes in ACA Verification
Leave Unsolved Problems

2. HOLES IN ACA VERIFICATION MBAA © 2014
"
The rollout of Obamacare has
produced some tremendous
growing pains in the United States.
This is true not only for those
implementing the new law, but also
for the consumers, the insurance
companies, and even the medical
professionals.
"
A new growing pain of sorts has
reared its head, proving that the
program still has large-scale
wrinkles to be ironed out.
"
The Department of Health and
Human Services submitted a report on the systems that were put in place to prevent applicants
from using inaccurate information (mistakenly or intentionally) to receive health insurance or
subsidies.
"
The audit indicates that there is a gaping hole in the system, and this has shed a bright light on
the issues that marketplaces are having rectifying certain inconsistencies that have been
reported. This only reignites any arguments that may have been forgotten regarding the entire
system’s functionality.
"The Office of the Inspector General (OIG) analyzed exchanges that included Covered California,
Healthcare.gov and Access Health CT (Connecticut’s exchange). From each marketplace, 45
random applications that were already determined to be eligible were inspected. None of the
three exchanges were effective in ensuring an applicant’s eligibility for an insurance plan by
confirming the information given.
"
In the 45 random cases reviewed in California, seven of them were not verified for citizenship
through the Department of Homeland Security when their social security number was listed as
Page 2
Millions of Obamacare Application
Discrepancies Remain Unresolved
The Report

3. HOLES IN ACA VERIFICATION MBAA © 2014
not belonging to a United States citizen. Also, 30 of the 45 applications had contradictory
information, and 19 of those were left unresolved.
"
Inspector General at HHS, Daniel Levinson, said, “The deficiencies in internal controls that we
identified may have limited the marketplace’s ability to prevent the use of inaccurate or
fraudulent information when determining eligibility of applicants for enrollment.”
In fact, nearly three million “inconsistencies” (meaning information that was given on an
application did not match the records that the government had) remain unresolved.
"
These issues were to be taken care of months ago to ensure, among many other things, that
those applicants who did not qualify for subsidies or a health insurance plan did not receive
them.
"
The audit stated that “The Federal marketplace was not able to resolve inconsistencies related
to: citizenship, status as a national, lawful presence, residency, family size, annual household
income, and whether the applicant was eligible for minimum essential coverage through
employer-sponsored insurance.”
"“The deficiencies in internal controls that we identified may have limited the marketplaces’
ability to prevent the use of inaccurate or fraudulent information when determining eligibility of
applicants for enrollment in qualified health plans,” said the OIG.
"
The majority of the issues concern either income or citizenship status, which are both large
factors in qualifying for Obamacare and its subsidies. Only citizens can apply for and receive
Obamacare, and only those whose income falls within a certain category qualify for subsidies
and tax credit assistance. A discouraging 77 percent of the applications with inconsistencies
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The Biggest Issues
The deficiencies in internal controls that we
identified may have limited the marketplace’s
ability to prevent the use of inaccurate or
fraudulent information when determining
eligibility of applicants for enrollment
- Daniel Levinson, HHS
“

4. HOLES IN ACA VERIFICATION MBAA © 2014
contained information that
differed from what federal
records show in either income or
citizenship status.
"
Following closely behind
citizenship and income are other
factors which can affect eligibility
for both insurance and the
subsidies to help pay for it.
Those factors are Native
American status, social security
number, employer-sponsored
m i n i m u m c o v e r a g e , n o n -
employer sponsored minimum
coverage, and incarceration
status.
"
Some other issues noted, however, have been ridiculous at best. One marketplace reported
children being “erroneously identified as incarcerated.” With such a wide range of inaccuracies,
a system that is less than fully capable of detecting and preventing inaccurate levels of
coverage or payment assistance, can be extremely costly to taxpayers as well as the insured.
"
According to the audit, “…as of Feb. 23, 2014, the Federal marketplace had resolved
approximately 10,000 of the 2.9 million inconsistencies (less than 1 percent).” Now, after nine
months of effort, 85 percent of these discrepancies remain undone. Out of the three million
issues reported, only 425,000 have been fixed.
"
In the federal exchange, there was an application where the social security number was left
blank and the applicant was still deemed eligible.
"
The audit also noted that the exchanges trusted the applicants’ word regarding their identity
and citizenship rather than going through a confirmation process.
"
Reportedly, there is no requirement for any other verification beyond the applicants’ word;
however, this information did not sit well with many who already have a sore spot for
Obamacare.
"
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…as of Feb. 23, 2014, the Federal marketplace
had resolved approximately 10,000 of the 2.9
million inconsistencies (less than 1 percent).
“

5. HOLES IN ACA VERIFICATION MBAA © 2014
Senator Jerry Moran said, “Once again, we are provided further evidence that Obamacare is
not working. In fact, the administration is relying on nothing more than the honor system to run
a billion-dollar program.”
"
The report went on to note that, since the federal marketplace lacks the ability to correct the
majority of the inconsistencies, there is no way they can guarantee that the applicants meet the
necessary requirements to enroll in any of the insurance plans or receive subsidies.
"
"
Some application issues were actually
expected due to mistakes while filling out
the application or because of applicants
p u r p o s e l y re p o r t i n g i n a c c u r a t e
information so that they would qualify for
a benefit that they wouldn’t otherwise
receive. The numbers reaching three
million were definitely not expected.
"
It was also reported that some of the
marketplaces did not reach out to the
applicants and notify them of any issue
with their application.
"
A three-month time frame was forecasted
to get the data caught up and reconciled.
The process, however, was delayed due to some technical problems, according to the
Department of Health and Human Services Office of Inspector General.
"
The Centers for Medicare and Medicaid Services (CMS) said that they are “committed to
verifying the eligibility of consumers who apply for enrollment in qualified plans.” They have
also stated that this overwhelming number of inaccurate information will not put anyone’s
health insurance at risk.
"
CMS reportedly contacts those with inconsistencies on their application many times and
through multiple avenues. “We are actively reaching out to consumers to provide additional
information that supports their application for coverage and verifying their information every
day.”
"
They do not consider the residency verification practices to be an issue that actually need
reporting. They also stated that the requirements of the federal government were adhered to
and that there really were no complete, reliable sources to verify residency.
"
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What the Government is Saying

6. HOLES IN ACA VERIFICATION MBAA © 2014
It was also reported that often
inconsistencies aren’t of such a
high caliber that they will
completely disqualify an applicant.
It’s quite possible that if a child is
adopted one year, federal records
may show a different family size
from the previous year.
"
It is also possible that a layoff or
pay cut may cause a current
i n c o m e n o t t o m a t c h t h e
information that the IRS has based
on a comparison of the prior year’s
return.
"
Not everyone feels this way. Rep. Diane Black said, “This report confirms what many of us
already knew – that despite repeated reassurance from this administration, the systems were
not in place to determine income eligibility for Obamacare subsidies when this law was
implemented.”
"
She went on to say that “This outrageous mismanagement of taxpayer dollars will likely lead to
billions of dollars in waste and abuse, all because this administration moved forward with
implementation despite repeated warnings that the systems were not ready.”
"
The CMS is busy working to handle the inconsistencies and ensure that applicants and their
dependents get what they should from Obamacare – not more and not less because of a data
error. For those who are receiving subsidies and health insurance that actually do not qualify, a
loss of insurance and/or subsidies is quite possible.
Page 6
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